Putin’s Miscalculated Machinations Serve Beijing’s Interests

Vladimir Putin’s enigmatic behavior is a labyrinth of nostalgia, paranoia and provocation, a phenomenon that is nearing its political expiration date. Albeit confusing, it strives for the same self-preserving outcomes: stability and sovereignty. Unfortunately, in the current geopolitical context, Ukraine is the most vivid manifestation of this simple, yet multidimensional strategy. Beyond its immediate imperial desire, Putin’s engineered invasion of Ukraine is not just nostalgia, but miscalculated posturing vis-à-vis his versatile partners in Beijing. In return, as sanctions over-compliance and reputational risk management drive foreign capital out of Russia, an emboldened, anti-American Xi Jinping will look to capitalize on Putin’s mistake. Given this dual-threat, the US State Department needs to design contingency plans that risk-assess the growing “Chinafication” of Russia’s political decision-making, as well as debt, commodity and commercial markets.

To understand the current geopolitical crisis it is imperative to first decipher the conscience of Russia’s political establishment. The Kremlin’s philosopher of choice, Ivan Ilyn, described the Russian nation as such: “This idea should be state-historical, state-national, state-patriotic, [and] state-religious.” A century later, Ilyn’s observation is the model of Putin’s rigid propaganda architecture – the only perceived solution to the country’s unique, vulnerable geography. For the Russian president, Ukraine is part of that delusion; an unfortunate portrayal of the Kremlin’s chauvinism and nerve; a signal to Beijing about Russia’s preparedness to mobilize and rampage across frontiers.

However, Putin is simultaneously strong and weak. Unlike many Western liberal democracies, Russia does not possess robust, accountable and lasting institutions of governance. Instead, Putin has established a state-society nexus consisting of personal hierarchical relationships based on quid-pro-quo dealings, with a convenient label: “managed democracy.” In such an uncreative system, loyalty is the key ingredient of stability; and in this crisis the security apparatus’ loyalty is already being firmly tested.

Herein lies the fundamental problem. The end of the twentieth century witnessed a victorious  Transatlantic community that prioritized quasi-democratization efforts in Moscow and a weak, but aggrandizing, China on Russia’s easternmost border. Since then, global power dynamics have changed, and Russia is now suffering from an inferiority complex as Beijing’s junior partner. Despite the politics of cordiality, the Kremlin has been particularly careful to keep China at arm’s length on issues related to national security. Thus, the longevity of this informal, non-ideological arrangement between Moscow and Beijing will be guided by adaptation rather than by pragmatic cooperation.

This is Russia’s peculiar vulnerability. In administering a loosely connected country, the government in Moscow has historically sought to protect its borders by establishing buffer zones through intimidation and occupation: a strategy that is currently being implemented in Ukraine. Yet, the Kremlin is unable to do this with China. Therefore, as Russia morphs into a political and financial quasi-pariah state, Beijing – not Moscow – will determine the future of the feigned Sino-Russian alliance. 

This is where the stakes in China’s game with Russia may also skyrocket suddenly and exponentially. In the near future, if the Kremlin’s politico-security hierarchy fractures once again, China could mirror Moscow’s annexation of Crimea and the Donbas region by occupying parts of Russia’s underdeveloped Far East, which are rich in a number of vital energy commodities, agriculture and chemical products that Beijing already purchases and consumes at large. Albeit unlikely, such a scenario deserves recognition, given the region’s unparalleled resource-base and influence on global markets. In 2006, Russia’s Ministry of Internal Affairs already reported a vast influx of Chinese settlers into the country’s Far East. Over a decade later, the “myth” of Chinese mass migration still does not discount Beijing’s existing demographic pretext for annexation.

Moving back to the present, Xi is scrutinizing the situation in Ukraine for useful intelligence on Euro-Atlantic decisiveness and Putin’s political stability. Robust sectoral sanctions targeting Russian financial service providers, as well as account and asset freezes on the Russian Central Bank's access to its dollar-, yen- and euro- denominated foreign exchange reserves, have already caused mayhem in the country’s capital and currency markets. Although the country’s financial system has been artificially stabilized over the past weeks, further deterioration of Russia’s credit profile will inevitably guide Moscow even more toward the Chinese technology, energy and bond markets. 

This is where, as Russia undergoes the “Iran phase”, Putin’s invasion will conclude with one victor – China. For Xi’s imperial ambitions, the immediate focus is solving Beijing’s grievance with Taiwan. However, beyond that, the rich lands and markets of a more desperate Russia will remain a lucrative allure, inevitably lurking in the back of Xi’s mind. It is thus imperative for the United States to monitor Beijing’s political and financial maneuvers vis-à-vis Moscow, especially as it relates to sanctions evasion, rogue banking and critical infrastructure investments. Any lifelines provided to Russia today could be utilized as trojan horses against the interests of Washington, down the line.